By Rachel Chalmers
WebMethods Inc, the Fairfax, Virginia-based provider of infrastructure software and services for business to business integration, has filed with the Securities and Exchange Commission for an IPO valued at $45m. The company’s software, WebMethods B2B, helps customers deploy real-time business to business e-commerce applications by integrating their existing enterprise applications with those of their suppliers, customers and other partners. Morgan Stanley Dean Witter is lead manager of the offering, with Merrill Lynch & Co, Dain Rauscher Wessels and Friedman Billings Ramsay acting as co-managers. As ever, it’s the Risk Factors section of the S1 filing that tells the most interesting tales. We have never been profitable, WebMethods’ lawyers report. We have incurred net losses in every fiscal period since we began operations. For the fiscal year ended March 31, 1999, our net loss was $3.3m. For the six months ended September 30, 1999, our net loss was $5.0m. As of September 30, 1999, our accumulated deficit was approximately $11.1m.
That’s not all. WebMethods notes that its customer base is highly concentrated, and that the loss of a single customer could significantly harm its business. During the six months ended September 30, 1999, two customers accounted for approximately 45% of our total revenue, one for approximately 35%, and one for approximately 10%, the lawyers write. The same holds for WebMethods’ business partners, especially SAP AG. A developer partner agreement between the two gave WebMethods credibility and access to the SAP customer base. We cannot be certain that SAP AG’s interest in promoting our software to its customers will be consistent with our own, the company admits. If it’s not, WebMethods could find itself in big trouble.
